The deficit in the US current account is increasing drastically and it has happened again this year. According to an article published in American Chronicle by Fry “With the March 9 release of January's trade figures showing a marked increase in the U.S. trade deficit, a battle between free trade supporters and protectionists is taking form in Washington. The deficit with China, which rose to 17.9 billion US dollars, is the driving force behind calls from Capitol Hill to take action to bring the Chinese trade deficit back into more manageable levels.” (Fry, 2006)
Altman expressed his viewpoint that “The main reason to worry about the deficits is that they represent America's growing debt to the rest of the world. If we're not paying for imported goods and services with products of our own, then we're passing out IOU’s in the form of stocks, bonds and other securities. The nation can keep rolling over and issuing more of these IOU’s as long as foreigners are willing to take them. But if that were to change, we'd be in big trouble.” (Altman, 2006)
If United States imposes tariffs on Chinese imports and in this way tries to force china to revalue Yuan this will have a negative impact on American consumers for sure. According to Fry “The average American consumer would be hit with higher prices for many of the items used in day to day life and would have to reduce discretional spending in order to afford the purchase of necessities. While the immediate effect would bring our trade numbers closer together, it would have other, more detrimental reactions. As soon as America enacts a tariff upon Chinese goods, the call from third-world countries for us to end our farm subsidies would reach a fevered pitch................
